The median equity deal size into China-based venture-backed companies totaled $10 million in last year’s fourth quarter, up from $4.5 million in the third, according to data from DJX VentureSource.

Largely dependent on which sector the company is in, and what the new capital is intended for, the size of a round will vary, but the amount of capital invested into Chinese companies is generally set to increase, market watchers say.

Venture capitalists are particularly under pressure to put more money in, as they feel the heat from Chinese corporate investors, like Internet behemoths Tencent Holdings Ltd. and Alibaba Group Holding Ltd., as well as Baidu Inc., China’s equivalent of Google Inc., and software company Qihoo 360 Technology Co., which are aggressively buying stakes in mainland startups.

“Corporate investors are driving up deal prices as they don’t mind paying more for strategic benefits, but for venture capital and private equity investors this is unwelcome competition. They gain nothing from overpaying for an investment,” said Rocky Lee, head of Cadwalader, Wickersham & Taft LLP’s Greater China corporate practice.

As corporates and venture capital firms work alongside each other, there’s a likelihood the former could buy out the latter’s shareholding when its investment period is up, which is another factor that’s likely driving up valuations of some businesses, Mr. Lee added.

“There is less reliance on initial public offerings…Corporate investors are likely buyers of the portfolio company, so for venture investors, this lessens the risk of a deal,” he noted.

Not all venture capital firms will struggle to meet these bigger rounds of funding.

Fund managers with a track record of investing and exiting portfolio companies are slowing increasing the size of new funds, which in turn gives them the flexibility to up their ticket size when necessary, said a Shanghai-based limited partner.

GGV Capital, which invests in both Chinese and U.S. startups, is one firm that has incrementally upped the amount of capital it has raised for new funds. The firm closed a $625 million fourth fund in 2012, up from a third vehicle totaling $610 million. GGV Capital is now raising a fifth fund, according to people familiar with the situation.

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